Problem $8-3($Incorporation of a Partnership; New books for the Corporation$)$

A statement of financial position for Bautista and Bernaldo, prepared on September $30.$

appears below. Partners share earnings and losses in the ratio of $3$:$1,$ respectively.

Bautista and Bernaldo

Statement of Financial Position

September $30,2010$

Cash

Assets

P $,42,000$

Accounts Receivable

Less Allowance for Uncollectible Accounts

$112,000$

Inventories

Equipment

Less Accumulated Depreciation

Goodwill

Total Assets

Accounts Payable

Bautista, Capital

Bernaldo, Capital

Total Liabilities and Owner's Equity

Liabilities and Equity

$206,000$

$440,000$

An appraisal of the assets discloses the following fair values:

Inventories

P $296,000$

Equipment

$520,000$

Bautista and Bernaldo, together with other three friends, decided to incorporate as $R_3$

Corp. with $50,000$ authorized shares of P$50$ par ordinary share capital. The three

incorporators acquired $10,000$ shares at P$70.$ Bautista and Bernaldo received $14,000$ stee

exchange for the net assets of the partnership except cash. On this date, the fair value of

is P$70$ per share. Bautista agrees to take $7,500$ shares and Bernaldo, $6,500$ shares

partnership cash is then appropriately divided between the partners.

Instructions: Give the entries to record the above on the books of the partnership and

new books of the corporation.